Murray Goulburn’s takes further drastic measures
Murray Goulburn dairy co-operative will be shutting three plants and wiping framer’s debts in an effort to turn its business around.
In an update to the Australian Securities Exchange (ASX), Murray Goulburn (MG) said it will be closing its Edith Creek, Rochester and Kiewa processing facilities by the first quarter of its 2019 financial year.
Closures at Rochester and Kiewa will commence August 2017 and a total of 360 jobs will be lost across all three plants.
MG said the closures will cost AUD $60 million, but will save the company $40 – $50 million annually once they take place.
Farmer debts forgiven
MG also announced that it would forgive all milk supply support package debts.
The loan package was given to its farmers in 2016 after MG lowered the price it was expected to pay farmers for their milk.
Wiping the debts will cost MG AUD $148 million, with the company giving back any repayments already made by farmers. This will be the case whether the farmer is still a MG supplier or not.
MG said it remains committed to paying its farmers $4.95 per kilogram of milk solids for the 2017 financial year.
Dairy Beverages and Nutritionals business scrapped
Following a review, MG has decided to scrap its Dairy Beverages and Nutritionals business, deciding to write-down the $62 million already invested in the project.
“These have been difficult decisions to make”
Reflecting on the announced actions, MG Chief Executive Officer, Ari Mervis, said they were important for the business.
“These have been difficult decisions to make, however they are necessary steps on the journey to ensure the future strength and competitiveness of Murray Goulburn,” Mervis said.
“A strong MG is of fundamental importance to the Australian dairy industry and these decisions are necessary to lay the foundation for the future,” he stated.
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